Moody’s gives B2 to American Axle notes

Moody's Investors Service said it assigned a rating of B2 to American Axle & Manufacturing, Inc.'s proposed $1.2 billion of senior unsecured notes.

The proposed notes will be used as partial funding for American Axle's announced transaction to acquire all outstanding shares of Metaldyne Performance Group Inc. in a cash and stock transaction valued at about $1.6 billion, and repay roughly $1.9 billion of debt at Metaldyne.

Moody’s said an upgrade would require continued revenue and earnings growth, resulting in strong free cash flow to support debt reduction. Support for a positive rating action includes the expectation of sustained EBITA/Interest coverage above 2.5 times and debt/EBITDA at below 3 times, while maintaining a good liquidity profile.

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